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March 26, 2021 10:30 AM

Texas winter storm impact still lingering

Jim Johnson
Rubber & Plastics News Staff
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    HOUSTON—The freezing temperatures of mid-February are long gone from the Gulf Coast in Texas and Louisiana. But the lasting impact on the rubber and tire industries will remain, in some cases for months to come.

    When temperatures fell below freezing Feb. 14—and then stayed there for the next two days—the chemical industry that supplies products to the synthetic rubber industry, as well as the rubber industry itself, was turned upside down.

    Facilities in this part of the world are not designed to weather temperatures that cold for that long, and operators quickly had to shut down sites in an effort to minimize damage.

    Even a month later, life has not completely returned to normal, said Bill Hyde, executive director of olefins and elastomers for IHS Markit, the international business information and analytics firm. He expects there will continue to be bumps in the road ahead.

    "We had about five days of misery," he said of the winter storm. "The damage during that brief period of time, it's almost apocalyptic."

    Covestro A.G.
    A look at Covestro A.G.'s plant in Baytown, Texas.

    The most severe damage was at refinery and petrochemical units in Texas, as recovery has been much quicker in western Louisiana in comparison. "In a lot of cases we have hit recovery or we're close to hitting recovery," Hyde said about Louisiana.

    Even a month ago, the expectation was that the industry would not need this much time to rebound from the cold weather.

    Rubber has been hit with a one-two punch of sorts as a result of the cold snap. Facilities making products such as ethylene, butadiene and styrene—building blocks for synthetic rubber—were damaged. But then the facilities actually making the rubber also went down.

    These parts of Texas and Louisiana typically can see temperatures fall below freezing for a few hours overnight when it does get cold, and that's something operators can manage. "To be below freezing for four days, that's something that's unheard of. You've got a number of things to deal with," Hyde said.

    Locations hit by the cold initially had to deal with a lack of power—either natural gas or electric—followed by repairs needed for damaged equipment. Even when those hurdles were cleared, facilities found themselves in a shortage of nitrogen, which is used to help restart equipment. This inert gas is used to pressurize and dry equipment in preparation for production to resume.

    "It's an integral part of the start-up process," Hyde said. "There's a whole lot of work before you actually push the button."

    The cold wave caused a partial restriction in the supply of raw materials and utility service interruptions for the Kuraray Group in Texas. The company said manufacturing sites run by subsidiary Kuraray America Inc., near Houston, have been under a scheduled operational suspension since mid-February.

    This includes the company's location in Pasadena, which makes thermoplastic elastomers, and the company's LaPorte facility that makes vinyl acetate monomer.

    "An evaluation of the impact of the cold wave on the Kuraray Group's operating results is now underway. We will promptly announce our findings if the financial impact of the cold wave is found to have been significant," the company said.

    Trickle-down effect
    Hyde expects the supply chain crimp caused by the winter storm will continue in the weeks and months ahead.

    Tire makers, facing a shortage of rubber or higher costs, could be forced to alter production or raise finished good prices. This will not impact premium tires as much as budget offerings, where there is less room for profit, Hyde said.

    "I can see these guys getting a little squeezed," he said.

    The tire industry, which already has been dealing with inventory issues caused by the pandemic as well as hurricanes last fall, now have to face disruptions caused by the cold weather. "It's just one thing after another," Hyde said.

    "This is going to push their restocking efforts back a month," he said, and some tire models are going to be harder to find in the short term.

    Tire manufacturers themselves were not impacted by the cold weather, but Hyde said their production is being impacted at a time when they are trying to rebuild inventory that was drawn down last year.

    "I think we're well on the way to recovery. But we're clearly not there," Hyde said.

    The storm also has raised the potential for a disruption in supply of automotive seating foam, according to a story in Automotive News, a sister publication to Rubber & Plastics News.

    That's because the supply of refinery co-products used to make propylene oxide needed in the production of polyurethane foam was impacted. The situation was described as a potential threat and not a given by sources, the newspaper reported.

    Related Article
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